The Personal Properties Securities Register plays an important role in farm lending, but do you know what that role is?
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The Personal Property Securities Act 2009 (Cth), or PPSA was enacted in 2009 and establishes the basis for the Personal Property Securities Register (PPSR). The PPSA consolidated a range of Commonwealth and State/Territory securities registers into a single Commonwealth register. The purpose of the PPSR is to enable buyers and sellers to register an interest in property other than real estate. The aim to protect against counterparty risk and failure to pay.
In an agricultural context, there are three main uses of the PPSR. First, where producers use crops or livestock as collateral to borrow to acquire new stock, supplies or equipment. Second, sellers can register an interest so that title of ownership is retained where a buyer or an agent takes possession of produce prior to the seller receiving payment. Third, buyers of second hand equipment or other personal property can check the register to establish whether anyone else has registered an interest in that property.
Registration of a security interest can protect a seller in the event of a buyer becoming insolvent by establishing the seller as a secured creditor, rather than an unsecured creditor as would be the case if no interest was registered. Registration can also give a seller claim to the proceeds of personal property that is onsold to a third party.
The PPSA provides agricultural producers with significant protections against counterparty risk. There is concern that the PPSA is not being used to the full extent it can be amongst agricultural producers.
We're undertaking a survey to learn how well farmers understand the PPSR, and how it can be improved. Ready to take the survey? Click here!